Segment Information | NOTE 4. SEGMENT INFORMATION Our segments are comprised of strategic business units or other operations that offer products and services to different customer segments over various technology platforms and/or in different geographies that are managed accordingly. We have two reportable segments: Communications and Latin America. We also evaluate segment and business unit performance based on EBITDA and/or EBITDA margin, which is defined as operating income excluding depreciation and amortization. EBITDA is used as part of our management reporting and we believe EBITDA to be a relevant and useful measurement to our investors as it measures the cash generation potential of our business units. EBITDA does not give effect to depreciation and amortization expenses incurred in operating income nor is it burdened by cash used for debt service requirements and thus does not reflect available funds for distributions, reinvestment or other discretionary uses. EBITDA margin is EBITDA divided by total revenues. In the first quarter of 2022, we reclassified into "Corporate" certain administrative costs borne by AT&T where the business units do not influence decision making to conform with the current period presentation. This recast increased Corporate operations and support expenses by approximately $270 for full-year 2021. Correspondingly, this recast lowered administrative expenses at AT&T’s Communications operations and Video (our former U.S. video operations contributed to DIRECTV in July 2021), with no change on a consolidated basis. The Communications segment provides wireless and wireline telecom and broadband services to consumers located in the U.S. and businesses globally. Our business strategies reflect bundled product offerings that cut across product lines and utilize shared assets. This segment contains the following business units: • Mobility provides nationwide wireless service and equipment. • Business Wireline provides advanced ethernet-based fiber services, IP Voice and managed professional services, as well as traditional voice and data services and related equipment to business customers. • Consumer Wireline provides broadband services, including fiber connections that now provide our multi-gig services to residential customers. Consumer Wireline also provides legacy telephony voice communication services. The Latin America segment provides wireless services and equipment in Mexico. Corporate and Other reconciles our segment results to consolidated operating income and income before income taxes. Corporate includes : • DTV-related retained costs , which are costs previously allocated to the Video business that were retained after the transaction, net of reimbursements from DIRECTV Entertainment Holdings, LLC (DIRECTV) under transition service agreements. • Parent administration support , which includes costs borne by AT&T where the business units do not influence decision making. • Securitization fees associated with our sales of installment receivables (see Note 9). • Value portfolio , which are businesses no longer integral to our operations or which we no longer actively market. Other items consist of : • Video, which includes our former U.S. video operations that were contributed to DIRECTV on July 31, 2021, and our share of DIRECTV’s earnings as equity in net income of affiliates (see Note 11). • Held-for-sale and other reclassifications, which includes our former Crunchyroll and Government Solutions operations. • Reclassification of prior service credits, which includes the reclassification of prior service credit amortization, where we present the impact of benefit plan amendments in our business unit results. • Merger & Significant Items , which includes items associated with the merger and integration of acquired or divested businesses, including amortization of intangible assets, employee separation charges associated with voluntary and/or strategic offers, asset impairments and abandonments, and other items for which the segments are not being evaluated. • Eliminations and consolidations , removed transactions involving dealings between Mobility and our Video business, prior to the July 31, 2021 separation of Video. “Interest expense” and “Other income (expense) – net,” are managed only on a total company basis and are, accordingly, reflected only in consolidated results. For the three months ended June 30, 2022 Revenues Operations EBITDA Depreciation Operating Communications Mobility $ 19,926 $ 11,697 $ 8,229 $ 2,017 $ 6,212 Business Wireline 5,595 3,572 2,023 1,313 710 Consumer Wireline 3,174 2,085 1,089 785 304 Total Communications 28,695 17,354 11,341 4,115 7,226 Latin America - Mexico 808 721 87 169 (82) Segment Total 29,503 18,075 11,428 4,284 7,144 Corporate and Other Corporate: DTV-related retained costs — 207 (207) 135 (342) Parent administration support (6) 303 (309) 4 (313) Securitization fees 17 78 (61) — (61) Value portfolio 129 37 92 10 82 Total Corporate 140 625 (485) 149 (634) Video — — — — — Held-for-sale and other reclassifications — — — — — Reclassification of prior service credits — 613 (613) — (613) Merger & Significant Items — 924 (924) 17 (941) Eliminations and consolidations — — — — — Total Corporate and Other 140 2,162 (2,022) 166 (2,188) AT&T Inc. $ 29,643 $ 20,237 $ 9,406 $ 4,450 $ 4,956 For the three months ended June 30, 2021 Revenues Operations and Support Expenses EBITDA Depreciation and Amortization Operating Income (Loss) Communications Mobility $ 18,936 $ 10,906 $ 8,030 $ 2,023 $ 6,007 Business Wireline 6,052 3,690 2,362 1,293 1,069 Consumer Wireline 3,140 2,063 1,077 769 308 Total Communications 28,128 16,659 11,469 4,085 7,384 Latin America - Mexico 688 667 21 150 (129) Segment Total 28,816 17,326 11,490 4,235 7,255 Corporate and Other Corporate: DTV-related retained costs — — — — — Parent administration support 3 414 (411) 8 (419) Securitization fees 15 12 3 — 3 Value portfolio 166 71 95 10 85 Total Corporate 184 497 (313) 18 (331) Video 6,639 5,275 1,364 148 1,216 Held-for-sale and other reclassifications 158 96 62 — 62 Reclassification of prior service credits — 672 (672) — (672) Merger & Significant Items — (70) 70 28 42 Eliminations and consolidations (57) (57) — — — Total Corporate and Other 6,924 6,413 511 194 317 AT&T Inc. $ 35,740 $ 23,739 $ 12,001 $ 4,429 $ 7,572 For the six months ended June 30, 2022 Revenues Operations EBITDA Depreciation Operating Communications Mobility $ 40,001 $ 23,860 $ 16,141 $ 4,076 $ 12,065 Business Wireline 11,235 7,054 4,181 2,612 1,569 Consumer Wireline 6,335 4,163 2,172 1,551 621 Total Communications 57,571 35,077 22,494 8,239 14,255 Latin America - Mexico 1,498 1,352 146 330 (184) Segment Total 59,069 36,429 22,640 8,569 14,071 Corporate and Other Corporate: DTV-related retained costs 8 335 (327) 269 (596) Parent administration support (18) 607 (625) 10 (635) Securitization fees 33 160 (127) — (127) Value portfolio 263 74 189 20 169 Total Corporate 286 1,176 (890) 299 (1,189) Video — — — — — Held-for-sale and other reclassifications — — — — — Reclassification of prior service credits — 1,230 (1,230) — (1,230) Merger & Significant Items — 1,115 (1,115) 44 (1,159) Eliminations and consolidations — — — — — Total Corporate and Other 286 3,521 (3,235) 343 (3,578) AT&T Inc. $ 59,355 $ 39,950 $ 19,405 $ 8,912 $ 10,493 For the six months ended June 30, 2021 Revenues Operations and Support Expenses EBITDA Depreciation and Amortization Operating Income (Loss) Communications Mobility $ 37,970 $ 21,882 $ 16,088 $ 4,037 $ 12,051 Business Wireline 12,098 7,378 4,720 2,571 2,149 Consumer Wireline 6,238 4,092 2,146 1,531 615 Total Communications 56,306 33,352 22,954 8,139 14,815 Latin America - Mexico 1,319 1,287 32 295 (263) Segment Total 57,625 34,639 22,986 8,434 14,552 Corporate and Other Corporate: DTV-related retained costs — — — — — Parent administration support (12) 787 (799) 15 (814) Securitization fees 28 52 (24) — (24) Value portfolio 342 115 227 20 207 Total Corporate 358 954 (596) 35 (631) Video 13,364 10,935 2,429 312 2,117 Held-for-sale and other reclassifications 389 275 114 — 114 Reclassification of prior service credits — 1,341 (1,341) — (1,341) Merger & Significant Items — (69) 69 114 (45) Eliminations and consolidations (119) (119) — — — Total Corporate and Other 13,992 13,317 675 461 214 AT&T Inc. $ 71,617 $ 47,956 $ 23,661 $ 8,895 $ 14,766 The following table is a reconciliation of Segment Operating Income to “Income from Continuing Operations Before Income Taxes” reported in our consolidated statements of income: Three months ended Six months ended 2022 2021 2022 2021 Communications $ 7,226 $ 7,384 $ 14,255 $ 14,815 Latin America (82) (129) (184) (263) Segment Operating Income 7,144 7,255 14,071 14,552 Reconciling Items: Corporate (634) (331) (1,189) (631) Video — 1,216 — 2,117 Held-for-sale and other reclassifications — 62 — 114 Transaction and other costs (185) — (283) (35) Amortization of intangibles acquired (17) (28) (44) (114) Asset impairments and abandonments and restructuring (631) — (631) — Benefit-related gains (losses), and other employee-related costs (108) 70 (201) 104 Reclassification of prior service credits (613) (672) (1,230) (1,341) AT&T Operating Income 4,956 7,572 10,493 14,766 Interest Expense 1,502 1,640 3,128 3,463 Equity in net income (loss) of affiliates 504 (18) 1,025 (24) Other income (expense) — net 2,302 1,206 4,459 5,436 Income from Continuing Operations Before Income Taxes $ 6,260 $ 7,120 $ 12,849 $ 16,715 |